AUD/USD: 0.9400EUR/USD: 1.3630Some pretty dire US data – Q1 GDP/Durable Goods – had the dollar under pressure for the 2nd half of today’s session and it looks as though this could remain the case over the next day or two. There is not too much data out today, so it could remain fairly rangebound, albeit with a soft bias as far as the dollar is concerned. Carry trades were a winner, particularly the Kiwi, and Gold and Silver both remain firm. BOE Governor, Carney will be speaking, and will possibly cause a few waves in Cable given his recent contradictory remarks on the UK economy
The dollar has had a tough session following the release of some very poor US data today. Durable goods orders dropped -1.0% in May (exp -0.1%) while the Q1 GDP was revised sharply lower to -2.9% (exp -1.7%).
The Dollar Index (DXY – Chart below) has been down to a 1 month low of 80.09 (100 DMA), suggesting that we are in for a test of levels below 80.00 once more, keeping the dollar under pressure as the market begins to second-guess whether the Fed will put its tapering programme, of winding back the economic stimulus, on hold.
The Euro has been up to a high of 1.3650 before a mild retreat to sit at 1.3630. As with yesterday, the daily charts still point to higher levels and I would be a bit wary, yet, of going short. The 4 hourlies also look a bit firmer and it could be that we see a retest of today’s high at some stage, above which it would then target the 6 June high at 1.3676 (200 DMA: 1.3670), which in turn lies just ahead of important Fibo resistance at 1.3687 (38.2% of 1.3994/1.2502). Above that, 1.3700 and then 1.3737 (50% pivot/100 DMA) would come into play, ahead of 1.3803 (61.8%).
The immediate support now comes at the day’s low at 1.3600, below which would head to Monday’s low (1.3573). Further bids would appear at Friday’s base at 1.3564, beneath which would once again open up the bottom of the recent range, where the Fibo support at 1.3518 (38.2% of 1.2754/1.3995) will again provide strong support ahead of the post-ECB spike low at 1.3502, which would also be strong support. A break below 1.3500 would head towards the medium term target at the base of the rising wedge/weekly cloud top, at around 1.3460, where we would be squaring up shorts and looking for a bounce. If wrong on this, a break of the wedge base would hint at a further move south towards 1.3400 (200 WMA), 1.3370 (50% pivot % of 1.2754/1.3995) and then to 1.3294 (7 Nov ’13 low) and 1.3260 (100 WMA).
Today is going to be fairly light on data, and therefore we should probably expect a day largely confined once again to 1.3600/50, however I do think that at some stage we could make a move towards 1.3675, and possibly to 1.3700, which may presents a sell opportunity ahead of the next leg lower for the Euro.
Economic data highlights will include:
EU Council Meeting, US Personal Consumption/Expenditure, Personal Income/ Spending Index
Jim LanglandsFX Charts www.fxcharts.com.au
